Age Pension Assets Test: How $3 Per $1,000 Reduces Your Payment (Worked Example)
Under the Age Pension assets test, once your assessable assets pass the "free area" for your situation, Centrelink cuts your payment by $3 per fortnight for every $1,000 over. A single homeowner with $450,000 in assets sits $128,500 over the $321,500 free area — that's a $385.50-per-fortnight cut. Below I work that exact case through step by step, and show the free-area and cut-off limits for all four categories.
The one rule that drives everything: $3 per $1,000
The assets test has just two moving parts: a free area (assets below this don't reduce your pension at all) and a taper rate applied to everything above it. The taper is fixed by Services Australia at $3 per fortnight for each $1,000 of assessable assets above your free area. There's no half-band or sliding scale — it's a flat $3 the whole way up until your payment hits zero. (Source: Services Australia — Assets test for Age Pension.)
Because Centrelink also runs an income test in parallel and pays you under whichever test produces the lower result, the assets test only "wins" when your assets are high relative to your income. For most asset-rich, income-modest retirees, the assets test is the binding one — which is why this $3 figure matters so much.
The free-area thresholds (full pension below these)
If your assessable assets are at or under the free area for your situation, you keep the full Age Pension on the assets test. These are the values effective from 20 March 2026 (the part-pension thresholds are reviewed each March and September):
| Situation | Asset free area (full pension up to) |
|---|---|
| Single, homeowner | $321,500 |
| Single, non-homeowner | $579,500 |
| Couple (combined), homeowner | $481,500 |
| Couple (combined), non-homeowner | $739,500 |
Non-homeowner thresholds are roughly $258,000 higher to recognise that renters can't shelter wealth in an exempt family home. Figures: Services Australia / SuperGuide (March 2026).
Worked example: Sandra, single homeowner, $450,000 in assets
Worked Example
Sandra is 68, single, and owns her home in Geelong. Her assessable assets total $450,000: a $90,000 account-based pension, $310,000 in shares and term deposits, a $40,000 car, and $10,000 of household contents at second-hand value. Her home is exempt, so it isn't in that total.
Step 1 — Find her free area. Single homeowner = $321,500.
Step 2 — Work out the excess.
$450,000 − $321,500 = $128,500 over the free area.
Step 3 — Convert to "thousands over".
$128,500 ÷ $1,000 = 128.5 thousands. (Centrelink doesn't round this down — the part-thousand counts.)
Step 4 — Apply the $3 taper.
128.5 × $3 = $385.50 per fortnight reduction.
Step 5 — Subtract from the maximum rate. If the single maximum (base + supplements) is, say, ~$1,178 per fortnight, Sandra's assets-test pension is roughly $1,178 − $385.50 = ~$792.50 per fortnight — before the income test is checked. Centrelink then pays the lower of the two tests.
The lesson: every extra $10,000 Sandra holds above $321,500 costs her exactly $30 per fortnight (~$780 a year) in pension. That's effectively a 7.8% "return" on drawing those assets down — useful to know before topping up savings.
The maximum pension rate itself changes every March and September with indexation, so always confirm the current base + Pension Supplement + Energy Supplement on Services Australia before finalising a number. The method above — excess × $3 per $1,000 — does not change.
What's assessable vs what's exempt
Getting this list right is where most people over- or under-estimate their pension. The single biggest exemption is your home.
| Asset | Treatment |
|---|---|
| Family home (principal residence) | Exempt — not counted, regardless of value |
| Super in accumulation phase, owner under Age Pension age | Exempt until you reach pension age (or start a pension/income stream) |
| Super once you reach Age Pension age / account-based pension | Assessable at current balance |
| Cash, shares, managed funds, term deposits | Assessable |
| Investment property & second properties | Assessable at market value (less any loan against it) |
| Cars, caravans, boats | Assessable at second-hand sale value |
| Household contents & personal effects | Assessable at second-hand ("garage sale") value |
Treatment confirmed via Services Australia — Asset types.
Value contents and cars at "garage sale" price, not insured value
This is the most common self-inflicted error. People list their home contents at the insured replacement value on their home-and-contents policy — often $60,000–$100,000. Centrelink wants the amount you'd actually get selling it second-hand today: a used lounge suite, an old TV, a five-year-old fridge. Realistically that's usually $5,000–$15,000 for a whole household. Reporting the insured figure can wrongly cut your pension by hundreds of dollars a fortnight. The same applies to a car — use a private-sale guide price (e.g. RedBook), not what you paid or what it's insured for.
Where the part pension stops: assets test cut-off limits
Once your assessable assets reach these upper limits, the $3 taper has eaten the entire payment and you get $0 from the assets test. Limits effective from 20 March 2026:
| Situation | Full pension up to | Part pension cuts out at |
|---|---|---|
| Single, homeowner | $321,500 | $722,000 |
| Single, non-homeowner | $579,500 | $980,000 |
| Couple (combined), homeowner | $481,500 | $1,085,000 |
| Couple (combined), non-homeowner | $739,500 | $1,343,000 |
Cut-off limits: Services Australia / SuperGuide (from March 2026). Sit just over a cut-off and you may still qualify for the Commonwealth Seniors Health Card — worth checking separately.
Free: the Age Pension assets checklist
Every assessable and exempt asset, with the second-hand-value pointers Centrelink expects — so you don't over-report.
You're on the list — we'll be in touch.
Frequently asked questions
How much does the Age Pension drop per $1,000 of assets?
Your fortnightly pension reduces by $3 for every $1,000 of assessable assets above your free area. That works out to about $78 per year of lost pension for each $1,000 over, or $780 a year per $10,000.
Is my home counted in the assets test?
No. Your principal home is fully exempt from the Age Pension assets test no matter its value. But your household contents inside it are assessable — at second-hand sale value, not insured value.
Is my super counted before I reach pension age?
If your super is in the accumulation phase and you are under Age Pension age, it is exempt from the assets test. Once you reach pension age, or start an account-based pension/income stream, the balance becomes assessable.
How much can a single homeowner have and still get a part pension?
From 20 March 2026 a single homeowner can hold up to $722,000 in assessable assets and still receive some part pension. Above $722,000 the assets test pays nothing. A single non-homeowner's cut-off is $980,000.
Should I value my furniture at what it's insured for?
No. Centrelink wants the realistic second-hand "garage sale" value — what you'd actually get selling it today. For most households that's $5,000–$15,000, far below the insured replacement value. Reporting the insured figure can wrongly cut your pension.
Does the assets test or the income test decide my payment?
Centrelink runs both and pays you under whichever produces the lower result. The assets test usually binds when you hold a lot of assets relative to your income.
General information, not personal Australia tax/legal advice. Verify with a qualified professional.
Sources: Services Australia — Assets test for Age Pension, Asset types; SuperGuide — Age Pension assets test rules (from March 2026). Thresholds effective 20 March 2026; verify current figures before acting.